Monday, December 05, 2011

What Modern Trade can Learn from Mom & Pop (Kirana)

Enough has been said about the FDI in retail (in India). And my views are very clear. I also strongly believe that the Indian players can stand the might of MNCs and infact capitalize on the efficiencies which these MNCs will bring to the table.
For the uninitiated, kiranas are shops that cater to the regular needs of food, grocery and also products like paan, cigarettes etc. within a locality/catchment area. There are also others like the headload and pushcart vendors.

Globally, as modern trade expanded, both organised retail players and unorganised retail participants have co-existed. The Walmarts and Costcos have co existed with the mom and pop stores (in India these are  called kiranas). I do believe that there is no reason why it cannot co-exist here in India.

However there are a few factors apart from systemic deficiencies which have worked in the favor of kiranas or the local store owner/vendor. 

Personalized service
  • Personal/ social touch
    • Ashraff, the person who runs our neighbourhood store knows all our family - where we stay, what we buy and our tastes. There is friendly banter and a relationship not just based on transactions. If he is free, he will discuss with you, the issues in the area and also about his family. When shopping ceases just to be transactional and more social, then the relationship has moved to the next level. Shopping becomes more a social activity rather than a mundane one. 
  • Knowledge of buying habits
    • Ashraff has a pulse on the consumer behaviour in our area.  He has a detailed understanding of consumers’ shopping preferences and habits - he knows what will sell, who will buy it and even at times when they will buy it. Even if a product is not available he will ring up the distributor and then tell you when he will get it. This level of knowledge is something modern trade needs to obtain. Analytics etc. are tools to facilitate this and while I do think it will be difficult to replicate in modern trade, a fair degree can be reached.
Daily top ups
Kiranas meet the needs of consumers who need to do daily top-ups of select food and grocery items. While the variety will be limited by virtue of size, kiranas keeping track are able to supply the daily and immediate needs. Modern retail formats offer the ability/ facility to buy several SKUs under one roof, but facilities do not exist to supply the customer daily/ immediate needs. The system needs to be re-engineered to work around this.

Order through telephone 

Given the proximity and relationship, we can call Ashraff and ask him for the products we want. We do not need to go physically there.

Home delivery
Within some time, we will have what we asked for at our doorstep. This kind of service endears us to the kirana. The convenience is unparalleled and sees us avoiding a lot of time and trouble to get the products home.  Modern trade can surely steal a page out of Ashraff's notebook and replicate with modifications ofcourse!

Ashraff allows us to pay once a month. I don't have to take my wallet each and every time. Actually he is smart, since I don't pay immediately, I end up purchasing much more than I require. A gentle upsell!

There are certain aspects which large departmental stores cannot replicate and hence there will always be a necessity for kiranas. The best which modern trade can do is to customize their services taking the key learnings from kiranas with the hope that the twain shall meet someday.

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